Cellphone carriers make money in two ways: They sell prepaid plans, allowing you to pay for your usage in advance. Or, they require that you sign a contract with them, agreeing to pay for a set amount of monthly usage. Contracts commit you to an extended period of service, usually two years.
Cellphone Contracts Are Adhesion Contracts
Cellphone contracts are typically one-size-fits-all. They're called adhesion contracts, and they contain the same language for every customer. If you want the service, you have no choice but to sign the contract without any changes. There's no room for negotiation. Adhesion contracts are just as legally enforceable as any other contract you would sign.
Contracts Don't Guarantee Quality
Cellphone contracts usually don't require that the carrier provide you with excellent service. Some contain cautionary language stating that they don't have to. Contracts are typically more about what you must do during the life of your plan, such as pay your bill on time. They don't guarantee that the network will always be available or that the service will never drop your calls in mid-conversation.
Liability for Early Termination Fees
If you want to get out of the contract with your carrier before it expires, most carriers charge early termination fees. These fees can be several hundred dollars. Your contract is legally enforceable, and as long as your contract includes terms for an early termination fee—and most do—the carrier can sue you in court to collect.
You Have Some Rights
Customers do have some rights. You can legally break your contract without paying an early termination fee if the carrier introduces a "materially adverse" change to the contract. Materially adverse changes usually involve extra fees that didn't exist at the time you signed the contract, or rate changes. If you agreed to pay $110 a month when you signed the contract, your carrier can't increase the rate to $150 after a few months, unless the contract mentions the potential change. If not, the contract becomes void and you can usually get out of it.
You can also potentially argue in court that the terms of your contract are misleading or grossly unfair. But these kinds of lawsuits are very difficult to win. (Learn what other circumstances might allow you to legally terminate a contract.)
Special Considerations for the Military
Federal law exempts some servicemembers from early termination fees. If you receive military orders to relocate for a period of not less than 90 days to a location that does not support the contract—meaning, your cellphone service doesn't work there—the carrier can't charge you an early termination fee. (50 U.S. Code § 3956).
Military servicemembers also get other financial protections under a federal law called the Servicemembers Civil Relief Act. To learn about these protections, see Nolo's article Legal Protections for America's Military: The Servicemembers Civil Relief Act.
Talk to a Lawyer
Contract law is complicated. And, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information about any of the laws discussed in this article and how they might apply to your situation, contact a consumer protection attorney.